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CO-EVOLUTION OF KNOWLEDGE AND COMPETENCE MANAGEMENT AND ITS STRATEGIC IMPLICATIONS

Jianzhong Honga

Mari Lehtonenb

Pirjo Ståhlec

a,b,cDepartment of Business Administration,

Lappeenranta University of Technology, Finland a [email protected] b [email protected]

c [email protected]

Session A-3

Abstract This paper reviews and identifies the distinct perspectives on knowledge management as well as the key conceptual views on competence and competence management. It introduces the perceivable co-evolution of knowledge management and competence management in recent research and practice, and shows the movement towards an integrated and systemic view where the overall challenge for both is the management of the whole system towards a self-generative and self-renewable organization. Strategic implications of this review and comparative analysis are suggested and discussed. Keywords: competence management, knowledge management, strategic implication.

Co-evolution of Knowledge and Competence Management and its Strategic Implications

Jianzhong Hong, Mari Lehtonen and Pirjo Ståhle

Department of Business Administration Lappeenranta University of Technology, Finland

{jianzhong.hong, mari.lehtonen, pirjo.stahle}@lut.fi

(OKLC Track A: Managing organizational knowledge and competence)

Abstract

This paper reviews and identifies the distinct perspectives on knowledge management as well

as the key conceptual views on competence and competence management. It introduces the

perceivable co-evolution of knowledge management and competence management in recent

research and practice, and shows the movement towards an integrated and systemic view

where the overall challenge for both is the management of the whole system towards a self-

generative and self-renewable organization. Strategic implications of this review and

comparative analysis are suggested and discussed.

Key words: competence management, knowledge management, strategic implication

Introduction

Recent research points to the inseparable and mutual supporting relation between

knowledge and competence and its significant implications for strategic management

(Grant, 1996; Sanchez, 2001; von Krogh & Roos, 1995). This paper introduces the

perceivable co-evolution of knowledge management and competence management in

recent research and practice, and shows the movement towards an integrated and

systemic view where the overall challenge for both is the management of the whole

system towards a self-generative and self-renewable organization.

The strategy literature of the past 30 years argues that there are two essential sources

of competitive advantage – that from market position and that from core capabilities or

distinctive resources. These respectively form two distinct perspectives “outside in” and

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“inside out” (see reviews by Miller et al, 2002; Nonaka & Takeuchi, 1995; Teece et al,

1997; von Krogh & Roos, 1995). The “outside in” perspective (e.g., the competitive

forces approach proposed by Porter and his followers) focuses on seizing market

opportunities and creating positioning advantage; while the “inside out” perspective

(e.g., the resource-based view) concentrates on the valuable resources (competence,

knowledge and skill assets) needed to sustain competitive advantage. This is of

particular concern in our paper, for the existent literature shows that, firstly, there is a

changing landscape toward a more “inside out” approach that particularly emphasizes

a firm’s valuable resources, and secondly, we have seen increasing attempts to

explore the intersection and dynamics of the two perspectives.

The paper first compares the concepts of knowledge and competence, and then

critically reviews and identifies the distinct perspectives on knowledge management as

well as the key conceptual views on competence management. It then explores

differences, overlaps and synergies between knowledge and competence

management. Strategic implications of this comparative analysis will be suggested and

discussed at the end of the paper.

Knowledge and Competence In recent business and organizational literature, the interdependent relation between

knowledge and competence has been particularly emphasized. von Krogh and Roos

(1995) construe knowledge as the underlying basis for forming competences. They

define competence as both knowledge specific and task specific. Grant (1996)

develops a knowledge-based theory of organizational capability, in which knowledge is

the pre-eminent resource of the firm, and organizational capability involves the

integration of multiple knowledge bases. On the basis of this, organizational

competence can be seen as knowledge integration. For Sanchez (2001), to create and

use knowledge is to develop competence, and knowledge plays a central role in

building, leveraging and maintaining organizational competences.

Despite the intimate relation between knowledge and competence, both concepts have

different intellectual roots from which they developed. Knowledge is a broader and

more abstract term, and has been discussed by philosophers for ages. Prusak (2001)

reviews the intellectual antecedents of knowledge also in economics (learning by doing

and knowledge acquisition), sociology (organizational structure, networks and

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communities; and the importance of social facts or circumstances in knowledge

management ), and psychology (cognitive processes, will and motivation in knowledge

work). Competence is a more specific term which has in its earlier forms been

associated with the conceptual establishment of the so-called scientific management

introduced by Taylor in the early 20th century (Taylor, 1911), and later on with the

psychological studies of an individual’s characteristics in terms of work performance

(e.g., McClelland, 1973; Boyatzis, 1982). Furthermore, the focuses of knowledge and

competence are different. It seems that knowledge has been treated as something that

is more concerned with the firm’s potential for success; and competence more with

actual and successful performance, but to a large extent the distinction of the two

concepts is relative. In many cases, they refer to the same thing and therefore are

often interexchangeable.

Different Perspectives on Knowledge Management

During the past decade knowledge management has become increasingly popular both

in scientific writings and organizational practices. This is understandable particularly for

today’s knowledge-intensive organizations and rapidly changing business. Knowledge

management (KM) is an extremely wide concept and it is rooted in various disciplines

and areas of practice with different focuses. Ståhle (2003) indicates that during its short

history, KM has been approached from four different perspectives: philosophic

perspective (“what is knowledge?”), perspective of organizational development (“how to

create and master knowledge together?”), business perspective (“how to extract value

from knowledge?”) as well as technological perspective (the efficient and effective tools

for storing, delivering and mining knowledge) (see Figure 1). From all these

perspectives KM has been defined and analyzed differently, which can also be seen in

the following views.

Wiig (1997) approaches from a managerial perspective and discerns four different

areas of emphasis related to KM activities in companies: 1) Top-down monitoring and

facilitation of knowledge-related activities, 2) creation and maintenance of the

knowledge infrastructure, 3) renewing, organizing and transforming knowledge assets,

and 4) leveraging (using) knowledge assets to realize their value.

In their recent paper Zorn and Taylor (2003) have identified four major uses of the KM

label: First, and most typically, KM is used to describe a relatively comprehensive

program or strategy intended to manage an organization’s intellectual capital or

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expertise. A second prominent meaning for KM is specific software applications that

are marketed as KM solutions. The third use of KM is to reference relatively small scale

initiatives that manage information in some way. And finally, the fourth use of the term

is in reference to what knowledge workers do, often without labelling it as KM.

Zorn and Taylor’s classification covers several essential aspects of KM such as

knowledge identification, codification and exploitation. The last use of the term

concerning “what knowledge workers do” may also imply another important KM aspect

as knowledge creation – it is therefore a clear and comprehensive category though it is

much simplified. The analysis as such is also more directed at KM practices, and

focuses mainly on the interactive relation between knowledge management and

organizational communication.

Fig. 1. Perspectives of Knowledge Management (Ståhle, 2003)

KNOWLEDGE

PERSPECTIVE OF PHILOSOPHY

PERSPECTIVE OF ORGANIZATION

(NETWORKS,SOCIETY)

PERSPECTIVE OF

TECHNOLOGY

PERSPECTIVE OF BUSINESS

ECONOMIC VALUE

COMMUNICATION

TOOLS KM / IC

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Another way to approach the heterogeneity of KM perspectives is to make

differentiation among distinctive and most influential KM models. Kakabadse et al

(2003) have identified five KM models which they consider either receiving growing

attention or emerging. They include 1) The philosophy-based model of KM, which is

concerned most with the epistemology of knowledge or what constitutes knowledge.

Interesting questions posed in relation to this model include “What do we not know that

we know?” or “What do we know that we don’t know?”. 2) The cognitive model of KM,

deeply embedded in positivistic science as the tool for understanding a mechanical

universe driven by single cause-effective relationships. For this model, knowledge is an

asset; it is something that needs to be accounted for, and a number of efforts are being

made to develop procedures for measuring it. 3) The network model of KM, which

focuses on awareness of ideas that exist outside focal organizations that can be

adapted for a vantage position. In this model, knowledge managing is perceived as

collaboration that requires special collaborative and networking skills, with less

emphasis on individual achievement and more on teamwork. 4) The community of

practice model of KM, which builds on the sociological and historical perspective. The

term “community of practice” was coined in the context of studies of traditional

apprenticeship, and knowledge has traditionally passed from old-timers to newcomers

in this way. Storytelling and metaphors are perhaps the best-known techniques for

conveying complicated meanings in a simplified format to handle complex situations. 5)

The quantum model of KM, which builds on the work of quantum physics, emergent

quantum technology and consequential economy. This model emphasizes meaningful

knowledge that is not fact-driven, but scenario-driven.

Similar type of work on identifying different KM models can be found in the work of

others. For instance, Wiig (1997) has clarified three KM notions or approaches: KM

from the information technology perspective, management of “intellectual capital” in

forms of structural capital and human capital, and a comprehensive KM approach

focusing on knowledge-related practices and activities. In addition to intellectual capital

models, McAdam and McCreedy (1999) add in their classification other two but

different KM models: knowledge category models (e.g., Nonaka’s KM model and

Boisot’s model based on information theory) and socially constructed models (e.g.,

Demerest’s KM model adapted from Clark and Staunton’s innovation studies and

communities of practice models).

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Without going deep into the jungle of various perspectives or definitions of KM we

summarize: KM means transformation of ideas to knowledge as well as transformation

of knowledge to added value (Ståhle, 2003). In general, one can say that knowledge

management refers to every practice where knowledge is central and when knowledge

is consciously changed, created, distributed and stored. The purpose of these practices

is to bring the right knowledge to the right place when it is needed and useful. KM is to

help people and organisations to 1). find, share and use information, 2). enhance

knowledge creation, and 3). master renewal and innovativeness (Ståhle, 2003; Ståhle

& Grönroos, 2003). What is ultimately meant by KM is dependent on context, strategy

view and finally basic conception of the world.

Conceptual Views of Competence and Competence Management

We identify from previous literature the following conceptual views of organizational

competence and its related management perspectives that seem to form the major

stream of competence management. They are: Individual Competence Profile, Core

competence, Competence-based Management, Capabilities-based Competition,

Dynamic Capabilities, Absorptive Capacity and Network / Relationship Competence.

Individual Competence Profile has much to do with conventional and contemporary

competence management in most companies. It started from the studies of

psychological characteristics of competent managers or employees in relation to their

job performance (e.g., Boyatzis, 1982; McClelland, 1973). It then extends to its

applications in a wide range of competence management practices, such as making

individual competence profiles visible via the company’s intranet, identifying the gaps

between present and required competences, as well as setting up training and

development programs for improving employee competences.

Since the concept of core competence was introduced by Prahalad and Hamel (1990),

competence management began a new track in which corporate-wide strategic

competence became the focus. In their article, Prahalad and Hamel (1990) define core

competence as “the collective learning in the organization, especially how to coordinate

diverse production skills and integrate multiple streams of technologies” (p.82).

Examples of core competences are, for instance, Canon’s personal copiers, desktop

laser printers, Yamaha’s digital Piano; Sonny’s 8mm camcorder; Philips’s optical media

and laser competence etc.

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According to Prahalad & Hamel, there are three fundamental properties as regards

core competences: First, a core competence provides potential access to a wide

variety of markets. Second, a core competence should make a significant contribution

to the perceived customer benefits of the end product. Finally, a core competence

should be difficult for competitors to imitate. From the examples above and their distinct

properties, we can see that the concept of core competence deals much with the firm’s

technical competences, that is, the corporate-wide technologies and production skills,

where human knowledge and competence are embedded.

We summarize the significant contributions of core competence as follows: 1) differing

from the view that focuses on employees’ individual competences, the concept of core

competence turns the entire focus on the firm’s competences; 2) it forms a kind of a

resource-based view (RBV) that sees competence as the key source of sustainable

competitive advantage for the growth of the firm. Particularly concerning the first

contribution, some other concepts have been developed along the same lines as core

competence. The most influential ones in today’s competence management are

competence-based management (Sanchez & Heene, 1997), capabilities-based

competition (Stalk et al, 1992), dynamic capabilities (Teece, 2003; Teece, Pisano, &

Shuen, 1997; Winter, 2003; Zollo and Winter, 2002), and absorptive capacity (Cohen &

Levinthal, 1990).

Competence-based management is one of the cornerstones of competence-based

competition theory, which refers to dynamic, systemic, cognitive, and holistic concepts

of competence, organizations, and their competence-based interactions (Sanchez &

Heene, 1997). Another group of RBV proponents (represented by Stalk et al, 1992)

claims that competing on capabilities should constitute the new rules of corporate

strategy. They indicate a fundamental shift

in the logic of competition - competition is becoming less like chess and more like an

interactive video game:

When the economy was relatively static, strategy could afford to be static. In s

world characterized by durable products, stable customer needs, well-defined

national and regional markets, and clearly identified competitors, competition was

a “war of position” in which companies occupied competitive space like squares on

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a chessboard, building and defending market share in clearly defined product or

market segments …

Competition is now a “war of movement” in which success depends on anticipation

of market trends and quick response to changing customer needs. Successful

competitors move quickly in and out of products, markets, and sometimes even

entire businesses – a process more akin to an interactive video game than to

chess. In such an environment, the essence of strategy is not the structure of a

company’s products and markets but the dynamics of its behaviour. And the goal

is to identify and develop the hard-to-imitate organizational capabilities that

distinguish a company from its competitors in the eyes of customers (Stalk et al,

1992: 62).

Capabilities-based competition takes a broader view of the skill base and focuses on

business processes rather than products and markets, which encompass the entire

value chain, in defining capabilities. Take Honda as an example: In explaining Honda’s

success, the innovative designs of its products or the way they were manufactured are

not the only factors, instead, its expertise in the “dealer management process” (the

company’s ability to train and support its dealer network with operating procedures and

policies for merchandising, selling, and service management) plays an equally

important role.

Dynamic capabilities refer to the firm’s ability to integrate, build and reconfigure internal

and external competencies in order to address rapidly changing environments. They

reflect an organization’s ability to achieve new and innovative forms of competitive

advantage given path-dependencies and market positions. The dynamic capabilities

approach seeks to provide a coherent framework which can both integrate existing

conceptual and empirical knowledge and facilitate prescription. In comparison to RBV,

dynamic capabilities emphasize processes, positions & path rather than resources, and

their focal concerns have more to do with with asset accumulation; replicability and

inimitability than asset fungibility (Teece, Pisano, & Shuen, 1997).

More recently, special attention has been given to coordination, entrepreneurship and

asset selection, which form the basic sources of developing a firm’s dynamic

capabilities (Teece, 2003). This means, firstly, that routine processes are an essential

element of dynamic capabilities. Examples include product development routines,

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quality control routines, and technology and knowledge transfer routines which support

the firm’s innovation activity. Secondly, a far more important source of dynamic

capabilities – the ability to not just sense changing market and technological

opportunities, but to seize them through effectuating “new combinations.” According to

Teece, this is where entrepreneurial aspects of management come into play and where

the distinctive transactional competence of the firm meets knowledge/skill

competences. Thirdly, the asset selection capabilities are not macro or cross industry

in nature. They are “situational.” For instance, a management’s decision to invest in

complementary assets typically involves decisions as to whether to invest to a greater

or lesser degree, i.e., they don’t implicate the choice of industry. The asset selection

component of managerial decisions is also where real option considerations come into

play. The value of an asset is not just its current cash flow, but also its option value.

Even though Teece has highlighted the issue of basic sources for developing the firm’s

dynamic capabilities, there is still no explanation on how they evolve in time. Zollo and

Winter (2002, 344) propose that dynamic capabilities emerge from the co-evolution of

tacit experience accumulation processes with explicit knowledge articulation and

codification activities. They define dynamic capability as “a learned and stable pattern

of collective activity through which the organization systematically generates and

modifies its operating routines in pursuit of improved effectiveness.” (340) They have

emphasized the point that dynamic capabilities are structured and persistent, routine-

using organizational activities. Thus, it takes time and money for dynamic capabilities

to evolve. According to Winter (2003), dynamic capabilities typically involve long-term

commitments to specialized routines. The more pervasive and detailed the patterning

of the activity involved, the higher the costs of the commitments tend to be.

Absorptive capability is the ability of a firm to recognize the value of new, external

information, assimilate it, and apply it to commercial ends. This ability is critical to its

innovative capabilities, and is largely a function of the firm’s level of prior related

knowledge. A firm wishing to acquire and use knowledge that is unrelated to its

ongoing activity need particularly to invest on absorptive capacity (Cohen & Levinthal,

1990).

Absorptive capability, according to Cohen and Levinthal, refers not only to the

acquisition or assimilation of information by an organization but also to the

organizations’ ability to exploit it. Therefore, an organization’s absorptive capability

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does not simply depend on the organization’s direct interface with the external

environment. It also depends on transfers of knowledge across and within subunits that

may be quite removed from the original point of entry. To understand the sources of a

firm’s absorptive capability, the authors focus on the structure of communication

between the external environment and the organization, as well as among the subunits

of the organization, and also on the character and distribution of expertise within the

organization. Concerning the adoption and diffusion of innovation, Cohen and Levinthal

assume that the ease of learning, and thus technology adoption, is affected by the

degree to which an innovation is related to the pre-existing knowledge base of

prospective users.

To date, two lines of competence research and practice seem to be emerging. One is

team or project collaborative competence. A competent team is invariably made up of

incompetent individuals, to varying degrees. Team or project collaborative competence

is a group’s ability to work together towards a common goal. This includes the group’s

ability to solve problems together, interpersonal competence to work together with

different individuals, knowledge and repertoire of procedures shared by a team or a

project in their work context (Vartiainen et al, 2003). A project-based working model is

common particularly in knowledge-intensive organizations (Hong, Pöyhonen & Stahle,

2003), and virtual teaming becomes a new challenge in organizational communication

and collaboration.

Another emerging line of competence management is related to the so-called network

competence by Ritter et al (2002) or partnering competence in Toiviainen’s (2003)

term. In a broad sense, this line of competence management refers to a management

practice where a set of concepts such as relation competence, alliance capability, and

customer competence play a significant role (Alajoutsijärvi & Tikkanen, 1998; Draulans

et al, 2003; Heimeriks, 2002; Prahalad & Ramaswamy, 2000).

To sum up, the dominant forms of current competence management are individual

competence management and corporate-wide strategic competence management.

Competence management that focuses either on teams or on networks is emerging

and receives growing attention. At the moment, competence development practices in

organizations that integrate different-level competences are few and far between.

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Co-evolution of Competence and Knowledge Management

Going beyond the Resource-based View? As introduced at the beginning of the paper, the core of success in business can be

focused either on a company’s market selection and positioning – the so-called

“outside-in” perspective, or the success can be seen to be based on internal capability

and resources of the company (management of internal change) – the so-called

“inside-out” perspective.

In strategic / organizational research, the competence perspective receives more and

more attention. As Sanchez (2002) writes, “while understanding industry structure was

perhaps the primary concern of strategic management theory in the 1970s … and while

characterizing firms as unique bundles of resources became an important perspective

in the 1980s, conceptualizing and analyzing the competences of organizations became

a key focus of management thinking in the 1990s” (Italics from the original text). The

shift from the competitive forces approach to the resource-based view in the 1990s is

evident, and even more interesting is the fact that Porter himself later on emphasizes

the need for firms and countries to broaden and upgrade their internal advantages in

order to sustain and extend competitive advantage (Grant, 1996).

Good examples of this shift towards the resource-based view or “inside out”

perspective are “building capability-creating organizations” in competence

management (Miller et al, 2002), and “knowledge-creating company” in knowledge

management (Nonaka & Takeuchi, 1995). The shift reflected in such literature points to

the increasingly important role of the firm’s self-renewing capability in the rapidly

changing business world. While Nonaka and Takeuchi’s (1995) approach lays

emphasis on that competitive advantage in business comes from the internal capability

of an organization to create new knowledge, that is, to create something new and

unique which will set them apart from the competition (Magalhães, 1998); Miller et al

(2002) accentuate that a continual and intimate connection with the market

environment is vital to this “inside out approach.” This shows an emergent interest or

need to explore the middle ground of “inside out” and “outside in” perspectives.

From our reviewed conceptual views of competence, it can be seen that they all go

along with the “inside out” perspective although some views, such as absorptive

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capacity and dynamic capabilities approaches, tend to lay emphasis on absorbing

external information and acquiring knowledge from focal organizations. This implies the

influence from the “outside-in” perspective, and shows a tendency within the “inside-

out” perspective to go, to some extent, beyond the original premise of the resource-

based view.

Three Generations of Knowledge and Competence Management Knowledge and competence management are in transition. The first theories of

knowledge management used the knowledge-carrying individual as the unit of analysis

and defined knowledge and competence in terms of discrete skills that can be codified

and measured. The first generation practices include standard implementations of

knowledge management such as various techniques of knowledge and competence

mapping and creation of large company-wide databases or knowledge repositories.

Information technology plays a major role in early KM development. The general

practices also refer to attempts to codify and measure the overall knowledge assets of

a company, to be included in a “balanced scorecard” or other such framework of

accounting for the “intellectual capital” of the firm (Edvinsson & Malone, 1997; Steward,

1997; Sveiby, 1997). According to Ahonen et al (2000), typical characteristics of the

first generation are: a) using the knowledge-carrying individual as the unit for mapping

and enhancing knowledge; b) defining knowledge as discrete skills or assets that exist,

or are required, in the company and can be identified, codified and measured; and c)

using an external, outsider’s “objective” point of view in analyzing knowledge and

competence.

The second generation focuses more on networking, communication and collective

practices rather than the things people apparently know and the information they

possess. The key idea of the second-generation theories is that knowledge is

embedded in and becomes constructed in collective practices. This has been related to

the recent development of several practice-based ideas and theorizing such as

communities of practices (Lave and Wenger, 1991), community of knowing (Boland &

Tenkasi, 1995), informal networks of expertise and user innovation (von Hippel, 1988;

1998), communication-intensive organizations (Blackler, 1995), and the concept of ba

(Nonaka & Konno, 1998). This generation focuses on social learning, flexibility and

ability to develop and be prepared for future challenges.

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The transition towards the third generation of KM indicates the emerging features of a

systems approach in which self-organizing capability of knowledge and creating new

knowledge and competences are critical. The basic views of the three KM generations

form a logically unified view on the transition that has happened and is happening

within KM at the moment (Ahonen et al, 2000; Snowden, 2002; Tuomi, 2002; von

Krogh, 1999). The three KM generations proposed by the same researchers are shown

in Table 1.

Table 1. The Three Generations of Knowledge and Competence Management (Ståhle

2003)

1. generation

2. generation 3. generation

Snowden (2002) information provision

Nonaka’s SECI self-organizing capability

Ahonen et al (2000)

knowledge as discrete, measurable and codifiable skills, skills needed at present

knowledge embedded in collective practices, preparing for the challenges of the near future

capacity to create new knowledge and innovations

von Krogh (1999) locating and capturing knowledge

sharing and transferring knowledge

generating new knowledge

Tuomi (2002) information systems, IC counting

social learning, communities of practice

mastering chaos, risk, uncertainty with efficient production

An Emerging Interpretative Approach In understanding what constitutes competence at work, Sandberg (2000) indicates a

major shift from the prevalent rationalistic approaches to an emerging interpretative

approach, that is, “a shift from attributes to workers’ conceptions of their work” (p.13).

The rationalistic approaches regard human competence at work as a specific set of

attributes such as the knowledge and skills used in performing particular work; while

the interpretative approach sees it as the meaning work takes on for workers in the

experience of it.

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More specifically, the results of Sandberg’s study (2000) in the department of engine

optimization at the Volvo Car Corporation demonstrates that a particular way of

conceiving of work delimits certain attributes as essential and organizes them into a

distinctive structure of competence at work.

Sandberg argues that conceptions, rather than attributes, should be the point of

departure both for efforts to identify and describe competence and for efforts to develop

competence in various jobs and professions. Sandberg’s study therefore suggests

change in conceptions of work as a more basic form of competence development. This

differs from the rationalistic approaches, in which competence development is regarded

as attribute acquisition.

In knowledge management work, Blackler (1995) reveals a similar shift occurring away

from the approach of heavy emphasis on training and qualifications (emphasis on

embedded, embodied and embrained knowledge and skills) towards the approach of

emphasizing creative problem solving, and further to the emphasis on encultured

knowledge and collective understanding. For Blackler, encultured knowledge refers to

the process of achieving shared understandings. Cultural meaning systems are

intimately related to the processes of socialization and acculturation. Active

communication, creative dialogue, and sense making processes, thus, play an

important role in this emerging approach.

In discussing complex acts of knowing, Snowden suggests a kind of sense-making

model, which utilizes self-organizing capabilities of the informal communities and

identifies a natural flow model of knowledge creation, disruption and utilization. This is

based on his observation and argumentation that we are reaching the end of the

second generation of knowledge management that focuses on tacit-explicit knowledge

conversion (e.g., that suggested by Nonaka).

The emerging interpretative approach challenges the orthodox of scientific

management. For instance, Snowden (2002) argues that the dogma of scientific

management, hypothesis based consulting and the generalization of best practice from

multi-client or multi project studies are inhibiting factors in progressing to the new level

of conceptual understanding required in the modern world. Knowledge is paradoxically

seen both a thing and a flow requiring diverse management approaches.

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An Integrated Approach of Worker and Work Worker-oriented core competences in HR practices include those related to job design,

staffing issues, training and development and rewards systems (e.g., Hagan, 1996).

The concept of work-oriented competences is able to aggregate single competences

across individuals, and it makes sense to speak of types of competences that an

organization needs for its operations, such as those that are task- or firm-specific (e.g.,

Nordhaug, 1998).

Sandberg (2000) identifies three main rationalistic approaches to competence: the

worker-oriented, the work-oriented, and the multimethod-oriented. Within the worker-

oriented approach, competence is primarily seen as constituted of attributes possessed

by workers, typically represented as knowledge, skills, abilities (KSAs) and personal

traits required for effective work performance (e.g., motive, skill, or aspect of one’s self-

image or social role). The worker-oriented approach has been criticized for producing

descriptions of competence that are too general and abstract. For instance, different

managerial jobs may require different competencies.

In the work-oriented approach, competence is also regarded as a specific set of

attributes. The difference is that advocates of the work-oriented approach take the work

as the point of departure. More specifically, they first identify activities that are central

for accomplishing specific work and then transform those activities into personal

attributes. By doing so, they are able to generate more concrete and detailed

descriptions of what constitutes competence, and thus, largely overcome the problem

of generating descriptions of competence that are too general. One basic criticism of

the work-oriented approach is that a list of work activities does not sufficiently indicate

the attributes required to accomplish those activities efficiently.

To avoid the criticism raised against the worker- and work-oriented approach, the

multimethod-oriented approach drawing on both of the above approaches tend to be

applied more often. For instance, Veres et al (1990) adopt a multimethod-oriented

approach to identify competence in the work of police lieutenants. Their description

consists of 46 worker attributes expressed in the form of KSAs that correspond to 23

policy activities. The work activities and the attributes are then quantified in percentage

terms relating to police work.

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Similarly, in knowledge development work, knowledge is defined and examined in the

context of work and activities. For instance, in Scribner’s work (1999), knowledge is

defined as an integral component of activities, along with technologies (tools and sign

systems) and functional skills systems. It seems that we are more and more moving

towards a systems approach that integrates people and work into the same analytic

framework.

Towards a Structural Approach There seems to be a transition from functional approach toward structural approach in

competence management. Drejer (2000) has argued that the literature on core

competences and competence-based strategy is limited to a functional view that

concerns only questions like “what are the effects caused by a competence?” (e.g.,

core competences defined in terms of their functional characteristics, for instance, offer

superior value to the customers of the firm). The author seeks a structural approach

which focuses and deals with the question “what are the elements of a competence

and their relations?” (e.g., Drejer defines a competence as consisting of four elements

and their relations – technology, people, organizational structure, and organizational

culture).

In knowledge management literature, we can see similar path of development. Petty

and Guthrie (2000) suggest a two-stage development from practice to theory: First

stage work is primarily concerned with consciousness raising and creating mass

awareness of the relevance of intellectual capital / knowledge management (e.g.,

“intellectual capital is something significant and should be measured and reported”);

the second stage of the development is to investigate ideas relating to the influence of

micro-level (i.e., organization-specific) conceptualizations of the value of intellectual

capital and knowledge management on the behavior of the capital and labor markets.

In a way, this tendency reflects the progress and advance of knowledge in both studied

areas or disciplines.

Table 2 summarizes the previous sub-sections concerning the co-evolution of

knowledge and competence management with our immediate comments and possible

strategic implications we would suggest in this connection.

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Table 2: Co-evolution of Knowledge and Competence Management Knowledge Management Competence Management Comments and some

strategic Implications “Outside-in” Perspective - > “Inside- out” Perspective

- > “Knowledge-creating company” (Nonaka & Takeuche, 1995)

the competitive forces approach (Porter et al, 1980s) - > the resource-based approach (core competence by Prahalad & Hamel, 1990; Porter et al, 1990s) “Building capability-creating organization” (Miller et al, 2002)

the shift points to the increasingly important role of the firm’s self-renewing capability in today’s dynamic business world

Individual as competence and knowledge carrier - > The focus on networking, communication and collective practices - > self-renewing work systems

knowledge as codified and measurable skills (individual based) - > knowledge embedded in collective practices - > capacity to create knowledge and innovation(Ahonen et al, 2000; Ståhle, 2003)

Individual competence -> Core competence (Prahalad & Hamel, 1990), Capability-based competition (Stalk et al, 1992), and network / relationship competences (Ritter et al, 2002; Alajoutsijärvi & Tikkanen, 1998)

Moving towards a systems approach that self-organizing capability of knowledge and the creation of new knowledge and competence is critical

rationalistic approach - > interpretative approach

Emphasis on embedded, embodied and embrained knowledge and skills - > emphais on enculturaed knowledge and collective understanding (Blackler, 1995); Information provision – > knowledge conversion - > sense-making model and self-organizing capability (Snowden, 2002)

shift from the rationalistic approach to the interpretative approach (Sandberg, 2000)

The emerging interpretative approach challenges the orthodox of scientific management, and diverse management approaches are thus required.

worker-oriented – > work-oriented - > an integrated approach

- > knowledge as an integral component of activities, along with technologies (tools and sign systems) and functional skills systems (Scribner, 1999)

Worker-oriented -> work-oriented - > multimethod-oriented / integrated approach (Sandberg, 2000); human competence - > business-driven competence

Moving towards a systems approach that integrates people and work into the same analytic framework

functional approach - > structural approach

from practice to theory: First stage work is primarily concerned with consciousness raising and creating mass awareness of the relevance of intellectual capital / knowledge management; the second stage of the development is to investigate ideas relating to the influence of micro-level (i.e., organization-specific) conceptualizations of the value of IC & KM on the behavior of the capital and labor markets (Petty and Guthrie, 2000).

functional view focuses on the question such as “what are the effects caused by a competence?”; structural approach on the question “what are the elements of a competence and their relations?” (Drejer, 2000)

Implying the advance of knowledge in both study fields of knowledge management and competence management

Strategic Implications

18

Drawing on our review and analysis, we conclude that successful organizations may

need both knowledge and competence management due to their interdependent and

mutually supporting relation. This can be called competence-based knowledge

management or knowledge-based competence development (Hong & Stähle, 2003).

Competence management may bring in a particular consideration on the firm’s tasks

and performance, and makes the object-related issues visible, which has been

neglected in many common knowledge management approaches and practices. On

the other hand, knowledge management may have a broader and more far-sighted

view for the competence perspective due to its more general nature and architectural

type of functioning.

In future research and practice, different agendas of knowledge and competence

management could be identified and proposed regarding the unique features and

different focuses of each perspective (see Table 3):

Table 3: Different Features and Focuses of Knowledge and Competence Management

Knowledge Management Competence Management

- content not specified, concern over antecedents and conditions for knowledge sharing and creation - concern over potential for competitive advantage in the future which is particularly applicable in turbulent and un-predictable circumstances - social and IT systems as enablers for knowledge creation

- clearly defined and specified by content (individual level, technical level, product level) - concern over efficiency and performance which is particularly applicable in predicted circumstances - competence as manageable benefits

Table 3 is based on our previous work (Hong & Ståhle, 2003), which is at the moment

staying at a more theoretical or hypothetic level. Thus, it calls for further and

particularly empirical investigation and examination.

By suggesting and applying competence-based knowledge management, the key

strategic issue is to explore the dynamics of synchronizing different-level competence

development and to integrate different knowledge management perspectives. As our

analyses show, both competence and knowledge management are moving towards an

integrated and systemic view where the overall development challenge for both is the

management of the whole system towards a self-generative and self-renewable

19

organization. The challenge is not so much to have them all separately, but to integrate

them and produce systemic efficiency according to the pursued strategy.

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